Drought punishes California sheep ranchers

Just as the U.S. lamb market has been rebounding, the multi-year California drought continues to pummel sheep ranchers, as they struggle to maintain their flocks in the face of scarce feed supplies and years of price volatility.

Lack of rain and dry pastures forced many California sheep ranchers to cull more heavily and sell their lambs early this year, because they were unable to afford the expensive hay needed to sustain their herds. The one bright spot was a strengthening market.

"The price was good, which was the best thing going for us, but it's still tough to make it all work," said Ryan Mahoney, a fifth-generation sheep rancher in Solano County.

He noted that while he sold his lambs at a higher price back in February and March, he actually earned less per head because he was marketing them at a lower weight.

At the same time, ranchers say their production costs have increased as they transport their animals greater distances in search of available pastures and pay more for hay that's also hard to find.

"We've never gone to the Salinas Valley with sheep, but we had to do it this year," said Ben Elgorriaga, a Madera County sheep rancher.

He also sent lambs to Oregon and had ewes scattered throughout the Central Valley, wherever he could find feed. Most of his lambs are on his home ranch, where he's feeding them corn, hay and culled carrots from a packinghouse.

Like Mahoney, Elgorriaga took advantage of the higher prices early on and shipped some lambs ahead of schedule. In the last two years, he's reduced his flock by 30 percent, now hoping to keep his numbers at about 2,000 head.

With so many lambs going to feedlots early, Elgorriaga said he's concerned there will be a backlog at the processing plant, slowing the demand for feeders, while lambs at the feedlot will become too old and too fat, lowering the quality of the meat.

Greg Ahart, vice president of sales and marketing for Superior Farms, the state's largest lamb processor, said there is not an excess of inventory yet, as those early lambs will not come off of feed until this summer, but he said he does worry there will be more lambs than normal ready for market in the coming months — also the time when many Midwestern lambs go to market.

"So we've got to work extra hard to get the product through the system in a timely manner," said Ahart, himself a producer and president of the California Wool Growers Association. "We're definitely talking to the grocery store chains and retailers about running features, running ads and pushing sales."

He noted retailers had a "very successful" Easter for lamb sales this year, and that success could inspire "continuing enthusiasm as we go forward."

With beef prices soaring, Ahart said lamb will definitely benefit, as consumers see the product as an attractive option next to competing proteins whose price points are at similar or higher levels.

Despite the challenges facing the state's sheep producers, Ahart said Superior Farms is investing millions of dollars on a new plant in Dixon, sending "a vote of confidence for the lamb industry."

The company unveiled plans for its new plant late last month. To be built next to the current one — which will remain operational until the new construction is complete — the new facility is expected to open next spring with a capacity of about 7,000 head per week, compared to 15,000 today.

Originally built in 1923 for beef processing, the old plant was bought by Superior in 1981 and has been retrofitted during the years. But it was never intended for lamb and veal processing and is much larger than it needs to be, said Ginny Hair, the company's spokeswoman. The new plant will be "right-sized" so that it will be "more efficient and appropriate for the number of livestock coming through today," said Shane MacKenzie, Superior vice president of operations.

Mahoney said the fact that Superior had chosen to build the plant in California, which has some of the nation's toughest regulations, "says a lot about their outlook on the industry and their outlook on the industry in California."

Helping the infrastructure of the California sheep business, he said, will "help the industry as a whole."

Despite the positive outlook a new packing facility might bring, Mahoney and Elgorriaga said they are not looking to expand their operations — but rather just survive through this drought.

Many California ranchers agree that finding available ground for grazing has become increasingly difficult, as environmental pressures have restricted permitted grazing on public lands and food safety concerns have discouraged many farmers from allowing sheep to graze on their after-harvest residue, a major source of summer feed. Also of concern is the potential drought-related reduction of this year's alfalfa acreage, another important source of feed for the fall and winter.